Bell Micro posts loss on slight revenue growth

Bell Microproducts Inc. said first quarter 2003 revenue for the period ended March 31 was up slightly to $532.6 million from $522.9 million in the prior quarter, and up 2% from the same quarter a year ago.

The San Jose distributor of semiconductors, storage, and computer products reported a net loss of $4.9 million, or 25 cents per share, compared to a profit of $384,000, or 2 cents per share, in the year-ago period.

The inventory mix at Bell was slightly off at the end of the quarter after the company took advantage of lower prices on products. Inventory has come into line since, the distributor said. Inventories rose to $194 million in the quarter, up sequentially from $183 million, resulting in 10.2 turns in the first quarter of 2003, compared to 10.6 turns in the fourth quarter of 2002.

"The technology product market environment continues to be very challenging," said Donald Bell, president and chief executive. "While revenues were flat with the fourth quarter of 2002, the combination of a continued soft economy, an unfavorable shift in product mix during the quarter, and an imbalance in supply and demand placed significant pressure on pricing and therefore gross profits in the quarter."

During an earnings call with analysts, Bell said a continued focus on cost reduction led the company to cut 127 positions in the first quarter, or 9% of the company's employees. That move, together with other measures, should reduce annual expenses by approximately $12.5 million, the company said.

Bell also consolidated the Enterprise Solutions division in the United States into its core distribution busines, which is expected to improve performance and further reduce costs. Bell Micro also has combined parallel operations in the Netherlands, Belgium, and Germany, where it will operate with a country manager organization in the future. The distributor's Trademark computer division also is being re-positioned to focus on more profitable business, the company said.